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Market Recap: Tuesday, October 6

Stocks were mixed Tuesday morning as investors digested a number of developments around President Donald Trump’s health and considered a moving target of possible election outcomes and prospects for further fiscal stimulus. In addition, Federal Reserve Chair Jerome Powell re-upped his assertion that further fiscal support would help support a faster economic recovery when working alongside the Federal Reserve’s own efforts. The Final Round panel breaks down the details.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round" here on Yahoo Finance. I'm Seana Smith. We had stocks reversing course in the final hour or so of trading. This comes after President Trump called off stimulus negotiations with Democrats quote, "until after the election." Now, you can see the Dow off just over 300 points right now, the S&P off just over 1%, and the NASDAQ is the big loser at the three major averages, off just around 1.5%.

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And that does it for the trading day today. Again, a huge reversal that we saw on Wall Street in the final hour or so of trading with the Dow closing off just around 350 points as we shake out the final last trades. The S&P off just over 1%, and the NASDAQ was the big loser of the three major averages, off just around 1.5%. This, of course, comes after President Trump called off stimulus talks. So even though we didn't see much progress in the talks for several weeks now, I think investors were a little bit more hopeful that the two sides would be able to reach some sort of deal before the November 3 election. But the fact that we won't get that obviously bringing back or reintroducing some uncertainty here in the markets.

When you take a look at the Dow, the biggest decliner in the Dow today was Boeing. The company saying that the pandemic is going to hurt aircraft sales for the next 10 years, so Boeing stock pretty significantly this afternoon. We're also seeing weakness in Apple and Microsoft. The S&P closing off just around 1.4%, and the NASDAQ off just over 1.5%, and you can see that reflected in the sector action today. Communication services, consumer discretionary and technology sectors are the biggest underperformers in the market today. Utilities, the defensive play there, the only sector holding on to gains and closing in the green.

I want to bring in my co-host for the next 60 minutes, Myles Udland. We're also joined by Yahoo Finance's Rick Newman, Akiko Fujita, and Jared Blikre joining the conversation.

Myles, let me kick it over to you first. Just stocks selling off into the close. Obviously, there was a lot of hope out there that we would get some sort of stimulus deal. Now that that's off the table, what do you make of today's action?

MYLES UDLAND: I can never quite tell what level of irony we're operating on when we discuss the markets caring or not caring, pricing things in, whether politics matter, so on and so forth. But clearly, there was some belief in the market that had built up over the last couple of days that there was going to be a stimulus bill, and I think with good reason. You give all the comments from, or you take all the comments from Nancy Pelosi and Steven Mnuchin, you put them together, and it sounds like we're in the ballpark of getting a deal done. I mean, I wouldn't rule out Trump changing his mind after today's tweets, but certainly, the market is taking him at his word and saying great, there won't be a talk on this till we get to the end of the election.

We were talking with JJ Kinahan in the last hour, and he said, you know, it's really not that big a deal if we're down 1.5% on this kind of news. Now, peak to trough, it's 2%. But I mean, I think his point is well taken. If this was the main catalyst for the market and we're down 2%, well, we clearly find out that it's not the main catalyst for the market, so I think we have talked ad nauseum about how we are heading towards the election. That will give us clarity on dozens of different market narratives that right now we sort of talk around or guess at, and this is but the latest instance of that, and I guess kind of sure, if we got this headline, we all would have guessed that stocks would be down. We could have throwing a dart at how much. I don't know how close we would have gotten, but that's all we learned today is that stimulus did matter a little bit. It mattered about 2% worth in the S&P.

SEANA SMITH: Well, Jared, taking a look at some of the levels at least in today's action, Myles was talking about how we don't really know how big of an impact it would have, so maybe it's right. Maybe it's good news that we're not down more significantly when you take a look at today's declines, but what are some of the levels that you're closely watching as we digest today's sell off?

JARED BLIKRE: Yeah, I mean, peak to trough, I think Myles caught it right on the-- nailed it, because it was a greater than 2% move, but a 2% move recently in this market is not out of the ordinary. I was just looking at some of the statistics that I compute at the close. Dow has its worst day in nine sessions, so does the S&P 500, but this is coming off the best session in two months for the Dow, so a bit of a reversal here. But we've been watching this 3,400, 3,410 area right here. This was clearly rejected.

We found a catalyst today. If this hadn't happened, what would have been? Well, maybe we'd be up here, and we'd be heading higher, but that's not what happened. So right now, it looks like we may be heading lower. I don't think we take out 3,200. That submerge is pretty strong potential of support and also 3,320 or so, so that captures this area that has been in play in here. We could very well hit this tomorrow on the open and simply reverse up, or you know, any number of possibilities there, but that's what I'm looking at.

And then you take a look at the VIX. We were just, Myles and I were looking at this right before the close, and we closed right under the 30 level. You can see 2,988, it actually still trades until 4:15, and that's because the options market underlying end trade, but we haven't taken that out yet. And you look at NASDAQ volatility, we now have NASDAQ futures, VIX futures that you can trade. That's still clearly in this consolidation pattern, haven't taken this out to the upside today or the downside. So all in all, you know, I think it was a big day, mainly in the bond market. Bond market is where we've seen the action recently. You look at that big upswing that we've had here, this puts some of that into question.

And I've drawn this before, we've basically been in this giant sideways trading range for well over six months right now in terms of the yield on the 10-year. So until we meaningfully break out of this, I'm not expecting anything disastrous for equities. Sometimes things can get disorderly when it moves too much, but those are my basic thoughts on this, you know? We have tomorrow is another day, and this kind of confirms that the market was interested in pricing in infrastructure, just not this month.

SEANA SMITH: All right, Jared Blikre, thanks for breaking that down for us.